North Korean Denuclearisation: A Chinese View of the Way Forward

After more than two years of intermittent negotiations,
participants in the fourth round of Six Party Talks in Beijing
finally produced on September 19, 2005 a breakthrough agreement on
a Joint Statement of Principles to denuclearise the Democratic
People's Republic of Korea (DPRK) in return for North Korea
receiving assistance to meet security and economic needs.

Since this agreement, the Six Party Talks[1] have made little headway. This is because the two
key players - the United States and North Korea - are still
disputing a number of major issues, including the timing and
sequencing of North Korean denuclearisation.[2] Yet, since the current nuclear crisis broke out in
October 2002, when the US accused North Korea of running a secret
uranium-enrichment programme, North Korea appears to be unhindered
in its efforts to increase its nuclear capabilities. The longer the
crisis lasts, the greater North Korea's nuclear capability and the
higher the stakes, for both Pyongyang and the Nuclear
Nonproliferation Regime. Resolving this nuclear crisis is an urgent
matter. Now it is the time for the Six Party Talks to agree to a
roadmap for faithful implementation of the Joint Statement.

China's Approach to Resolving the North Korean Nuclear
Crisis

China's strategic goal is "building a well-off society in an
all-round way" by 2020.[3] For
progress to be made in China's economic development towards
reaching this goal, it is important for there to be stability in
neighbouring countries, thereby promoting a stable regional and
international environment. From the beginning of the nuclear
crisis, China has made its position on the North Korean nuclear
issue clear: preserving peace and stability on the Korean
Peninsula; keeping the peninsula nuclear free; resolving the crisis
through peaceful and diplomatic means; and addressing any of North
Korea's reasonable security concerns.[4]

China is eager to see the North Korean nuclear programme
dismantled sooner rather than later. China fears that a nuclear
North Korea would stimulate a regional nuclear arms race - or
worse, spark an all-out war between North Korea and the United
States, which would have tremendous negative effects on China in
terms of economics, politics and security.

Meanwhile, to preserve stability on the Korean Peninsula,
Beijing maintains that the North Korean nuclear crisis must be
resolved through peaceful diplomacy. As the Chinese Foreign
Minister Li Zhaoxing explains, "To adhere to the direction of
peaceful talks is the only correct choice complying with the
interest of all the parties, and the Six Party Talks are the
realistic and effective way of peacefully solving the nuclear issue
on the peninsula through dialogue."[5]

China believes all coercive actions including economic
sanctions, isolation, the use of force and regime change will not
work and would escalate tensions.[6]
Based on its own experience in the 1950s, when the United States
and its allies imposed economic sanctions against China, Beijing
does not believe North Korea would yield to economic sanctions or
isolation. Beijing also worries that if it participates in
sanctions against Pyongyang, it will lose influence with Kim Jong
Il's regime, or even incur its hostility. Moreover, to maintain
regional stability, Beijing's bottom line is to avoid a war on the
peninsula or an abrupt collapse of the Kim Jong-Il regime.

An imploding North Korean economy would create a massive flow of
refugees across China's border. A US military strike on North Korea
would incur a full-scale war that would damage China's economic
development and devastate the Korean peninsula. Also, a US military
strike against North Korea could force Beijing into an embarrassing
and potentially dangerous position vis-à-vis Washington: the
1961 China-Korean Treaty of Friendship and Mutual Cooperation
obliges China to provide military aid in the event of war.

Furthermore, the fall of Kim Jong Il could lead to sudden Korean
unification and an uncertain geopolitical realignment, including
the prospect of US troops at China's border. Consequently, China
believes that the best option to pursue a nuclear-free North Korea
is through peaceful and diplomatic means that recognise the
importance both of regime survival and of the need for reform in
North Korea.

China believes that a resolution of the nuclear impasse has to
address reasonable security concerns of North Korea. As Pyongyang
sees it, its nuclear ambitions are driven solely by a threat from
the United States. Hence, Pyongyang would most likely give up its
nuclear programme if it could get reliable security, economic and
political benefits. Indeed, the Joint Statement shows hope for a
diplomatic resolution of the crisis. The six parties unanimously
reaffirmed in their joint statement that "the goal of the Six Party
Talks is the verifiable denuclearization of the Korean Peninsula in
a peaceful manner". North Korea has indicated a willingness to
pursue denuclearisation in return for a set of security and
economic benefits.

As North Korea's ally for more than fifty years and the provider
of most of its fuel and food aid, China is playing a proactive and
constructive role in defusing the nuclear crisis. During the Six
Party Talks, China acted not only as the host, but also as a
mediator and a constructive participant. China's role in the talks
is intended to be "conducive to peace and talks (quan he cu
tan)".[7] In order to resolve the
nuclear issue peacefully, Beijing hopes the parties will take
actions to build trust, reduce suspicions, enhance consensus, and
promote cooperation so as to create a win-win situation.

Given the long history of deep mistrust and animosity between
Washington and Pyongyang, North Korean denuclearisation cannot be
achieved overnight. Beijing also understands that if Pyongyang gets
nothing except more pressure it will continue to escalate the
nuclear crisis until it obtains Washington's cooperation. Thus,
North Korea needs a roadmap that links denuclearisation with the
concrete benefits of security guarantees, normalisation and
economic reform in a step-by-step manner.

This was emphasised by Foreign Minister Li in his opening speech
to the fourth round of the Talks in July 2005: "We believe that we
will finally eat our fill by biting gradually, finally get to the
destination step by step and reach the peak after climbing numerous
slopes. China will continue coordinating and cooperating with
related parties to make relentless efforts to realize
denuclearization of the Peninsula and maintain regional peace and
stability.''[8]

A Chinese Roadmap

In the Joint Statement, the six parties have agreed to take
coordinated steps to implement North Korean denuclearisation in a
phased manner in line with the principle of "commitment for
commitment, action for action". However, the US and North Korea
have very different views on the time-lines and sequencing of
actions towards denuclearisation. As a mediator, China should play
a more constructive role by initiating its own roadmap to
facilitate North Korean denuclearisation.

China's roadmap needs to include a timetable and reciprocal
actions that each side ought to carry out at each stage, with the
goal of complete denuclearisation of the peninsula, linked with
security assurances and diplomatic normalisation, economic reform,
peace-regime building on the Korean peninsula, and broader security
cooperation for Northeast Asia.

For each stage, the roadmap should make clear: what North Korea
should pledge to do; what inspection and verification provision
should be taken; and what benefits North Korea would receive
regarding security assurances and economic aids. To promote North
Korean denuclearisation, China could play a number of active roles.
For example, alone or together with Russia, China could provide
North Korea with some kind of security guarantee to reduce its
security concerns. China could help to settle some disputes between
Pyongyang and Washington during verification. China could serve to
monitor and press both parties to implement their pledges in good
faith at each stage.

Specifically, what might a roadmap for resolving the North
Korean nuclear crisis look like?

North Korea is using its known plutonium production facilities
to increase its plutonium stockpile and thus build more bombs, and
the nature of its centrifuge-based uranium enrichment programme is
still not clear. Moreover, verification of a centrifuge-enrichment
programme will require more transparency and more intrusive
measures. Considering the deep distrust between both sides, this
could be very difficult without more confidence- building
measures.

To avoid the HEU issue and any associated roadblocks, the most
promising approach to denuclearisation would focus on a "plutonium
first" approach.[9] Here a
three-stage process to North Korean denuclearisation could be
envisaged: the first stage would focus on a freeze of plutonium
production; the second stage would dismantle all of North Korea's
plutonium programmes; and the third stage would dismantle the HEU
programme.

Based on the Joint Statement, the Six Party Talks should make a
joint declaration at the outset of an agreement on the roadmap:
North Korea would commit itself to abandon all of its nuclear
programmes and return to the Nuclear Nonproliferation Treaty (NPT)
and to IAEA safeguards. North Korea would also need to pledge not
to transfer any nuclear weapons, components or fissile material and
know-how, pending the implementation of the three stages.

South Korea and North Korea would both agree to observe and
implement the 1992 joint declaration on the Denuclearization of the
Korean Peninsula. The US and others would pledge to respect
Pyongyang's sovereignty, normalise their diplomatic relations with
North Korea, negotiate a peace treaty on the Korean Peninsula, and
pursue a mechanism for security cooperation in Northeast Asia. The
US should also pledge to exist peacefully with North Korea, not to
pursue regime change in Pyongyang, and not to attack or invade
North Korea with nuclear or conventional weapons. Other nations as
well as the US should also commit to providing North Korea with
economic cooperation and energy assistance.

Stage One: Freezing Plutonium Production

Pyongyang has used its 5 MW (e) reactor at Yongbyon, which was
frozen under the 1994 Agreed Framework (AF) and restarted operation
since February 2003. In theory, these programmes add enough
plutonium for six to eight bombs to the stockpile of one or two
bombs that North Korea is believed to have possessed before the
1994 Agreed Framework.

Pyongyang has also resumed construction of the larger
50-megawatt reactor, which will be finished within a few years and
could produce 56 kg of plutonium (up to nine bombs) per year.[10] Thus a freeze on plutonium
production should logically be the first step; as such, it would
gradually enable some confidence building measures to be
established, making the goal of complete nuclear dismantlement more
possible.

A problem faced at present is that Pyongyang has demanded
compensation for freezing its nuclear facilities, but Washington
refuses to pay what it characterises as 'rewards' while also
insisting that North Korea quickly shut down its nuclear
facilities. By exhorting an unrealistic price from the North,
Washington is only providing more time for North Korea to expand
its nuclear arsenal. Thus, it is necessary to freeze plutonium
production as a first step towards North Korean
denuclearisation.

A freeze could be put into place over a six month period.
Initially, North Korea would declare all its plutonium production
facilities, and shut down operation of these facilities and other
programmes.[11] The freeze would need
to cover the following facilities:

shutdown of the 5 MW (e) reactor; monitoring of any remaining
irradiated fuel;

closing of the Radiochemical Laboratory; freezing of the fuel
fabrication complex;

freezing of the construction of the 50 MW (e) and 200 MW (e)
reactors; and freezing of nuclear waste sites.

Based on the 'reciprocal action' principle, the US and other
parties would take the following steps:

1) The US affirms its commitment to providing security
assurances to North Korea, including that it would not seek regime
change and would end the "hostile policy". This would show that the
US respected Pyongyang's sovereignty and has no intention to attack
or invade. The security assurance offered by the US would initially
be provisional but would become permanent as denuclearisation
proceeds. The US, South Korea and North Korea could consider
replacing the current Armistice Agreement, signed after the 1950-53
Korean War, with a trilateral peace treaty.

2) The United States would resume shipments of 500,000 tons of
heavy fuel oil (HFO) per year, or, if urgently needed, would
provide other tangible energy services at the cost equivalent of
the heavy fuel oil,[12] until South
Korea begins to supply 2GW of electricity. The US would increase
its humanitarian aid. Meanwhile, South Korea and others would begin
an energy survey of North Korea to assist in its energy
development. To compensate North Korea for the loss of electric
power (due to the delay and cancellation of the LWR project), South
Korea and others ought to begin work on the rehabilitation of the
North Korean energy system including power generation plants and
transmission and distribution (T&D) system.

3) At this stage, Washington would begin to take steps to remove
North Korea from the US list of terrorist countries, lift economic
sanctions, establish a liaison office toward normalised relations,
and assure economic cooperation between North and South Korea, and
Japan.

North Korea has been facing a huge electricity shortage for over
a decade and this has constrained its economic development. In
particular, this has contributed to worsened food shortages and the
terrible famines of the mid-1990s. North Korea's electricity supply
relies mainly on two domestic sources, coal and hydro-power. The
coal-fired generation has decreased due to a reduction in coal
production caused by flood damage and a lack of electricity.
Hydro-power is diminished by flooding, the low water level of
reservoirs, and the aging power system. Many of its T&D systems
are also outdated and stretched beyond their design lives.

It is estimated that the current total electrical output fell
nearly 70 percent from 1990 levels. Thus, the urgent need to
resolve North Korea's energy crisis includes rehabilitating its
power station and T&D system. However, North Korea lacks the
funds and technologies. Here I suggest that South Korea and others
should refurnish and/or rebuild North Korea's power stations and
T&D system as compensation for the loss of electric power cause
by the delays and then cancellation of the LWR project.[13]

Stage Two: Dismantling Plutonium Programmes

At this second stage, North Korea would begin to dismantle all
its plutonium weapons and plutonium production facilities. This
stage would include three procedures:

1) dismantle plutonium weapons and surrender all its
plutonium;

2) remove plutonium materials out of North Korea; and

3) dismantle or decommission all facilities associated with the
weaponisation programme and plutonium production.

North Korea would first need to make a declaration of the total
amount of plutonium it possesses. Pyongyang might prefer to take
the South African disarmament model, i.e. dismantling its bombs
first, then submitting plutonium totals from a pit or other
sources, and accepting verification confirming the termination of
its nuclear weapons programme.

When Pyongyang takes the first step to dismantle its nuclear
weapons, surrender all its plutonium, and return to the NPT and
accept full scope IAEA safeguards, it will be necessary for the US
to normalise its relations with North Korea. This would facilitate
the next steps. This second stage may take a few years (perhaps
three or more) to dismantle North Korea's plutonium programmes.

To reciprocate for Pyongyang's cooperation in Stage Two, The US
and others would be expected to provide security and economic
benefits along the following lines:

1) Washington would replace its liaison offices with an Embassy
and establish full diplomatic relations. Meanwhile, Japan would
normalise its relations with North Korea after resolving the
remaining issues regarding the kidnapping of Japanese citizens. The
US, South Korea and North Korea would agree to a peace treaty to
replace the Armistice Agreement. This is a key step toward truly
normalising relations, and it will be imperative in freeing the
Korean peninsula from the quagmire of the Cold War and maintaining
sustainable peace and stability in the region.

2) During this stage, South Korea would begin providing North
Korea with 2 gigawatts of electric power (say about seven years
worth) until the LWR are operating or there is another equivalent
energy supply. As the Joint Statement stressed, the six parties
would "undertake to promote economic cooperation in the fields of
energy, trade and investment, bilaterally and/or multilaterally".
The others would continue assisting North Korea in improving its
energy system, including the integration of the North's electricity
grid with South Korea's and /or with Chinese and Russian
networks.

3) The others would also help North Korea become a member of the
World Bank and Asian Development Bank (ADB), as well as aiding
North Korea's economic reforms and agricultural development.

It should be noted that the timing of "normalisation" is likely
to be contentious. The September 2005 Statement stated that
Washington and Pyongyang "undertook to respect each other's
sovereignty, exist peacefully together and take steps to normalize
their relations subject to their respective bilateral policies."
However, the normalisation of relations "subject to their
respective bilateral policies" is open to interpretation. According
to Washington, there will be a long road to normalising relations
with Pyongyang, which will include denuclearisation, but also
encompass discussions on human rights, biological and chemical
weapons, ballistic missile programmes, conventional weapons
proliferation, terrorism and other illicit activities. Pyongyang,
by contrast, wants normalisation at a much earlier stage, after a
freeze but before actually dismantling its nuclear programme.

What North Korea most wants is for the US to give up its
"hostile policy", and to obtain a reliable security assurance from
the US, including its highest priority of "regime survival". As far
as Pyongyang is concerned, the most tangible and vital security
assurance it requires is the normalisation of relations with
Washington. As its officials often emphasise, if both sides
establish normalised relations and thus build trust, then North
Korea will have no need for nuclear weapons. Pyongyang hopes to get
out of the Cold War's shadow by improving its relations with the US
and the west and by integrating itself into the international
community.

The only leverage that Kim Jong Il possesses is his threat to go
nuclear. Without building trust, Pyongyang is concerned that once
it dismantles its nuclear weapons, it will lose its 'deterrent',
with the likelihood that Washington would pursue regime change
through the use of force, as it did with Saddam Hussein's regime.
Pyongyang will therefore not dismantle its nuclear programme
without receiving a tangible security assurance on this, and
specifically the promise of normalised relations with
Washington.

For this reason, the roadmap proposed here argues that
Washington needs to establish normalised relations with Pyongyang
when North Korea dismantles its plutonium programmes. Also, an
additional requirement for normalised relations, which was pursued
by the Clinton Administration from 1996-2000, is for Pyongyang to
agree to a treaty ending the development of its long-range missiles
and ending the export of missiles and techniques. This will
significantly reduce the direct threat North Korean ICBMs pose to
US territory.

After receiving these kinds of tangible benefits, it is believed
that North Korea would be able to give up its nuclear programme and
agree to strict verification.

Stage Three: Dismantling the Uranium Enrichment
Programme

In this last stage, North Korea would complete dismantlement of
its HEU programme. From the beginning, North Korea would have to
make a comprehensive declaration of its HEU programme including
centrifuge design, research and development (R&D), procurement,
production and operation and identify all associated facilities or
items that are to be dismantled and decommissioned. This stage
could take one to two years.

The verification required will depend on the status of the
programme, such as whether it has produced HEU or not. According to
current estimates, North Korea is still several years away from
producing enough HEU for even one or two bombs. The programme
appears to be somewhere between the R&D level and pursuing a
capacity of a pilot experimental facility.[14] If so, it should be relatively easy to verify the
declared HEU activities. Detecting an undeclared centrifuge
enrichment programme would be a challenge, so North Korea will need
to explain and destroy the centrifuge prototypes and blueprints
provided by Dr Abdul Qadeer Khan.

At this stage, North Korea would also be required to ratify the
IAEA Additional Protocol to allow more intrusive inspections,
including complementary access and environmental sampling which
would make undeclared nuclear activities more difficult to hide. In
addition, other cooperative measures including interviews with
related persons should be accepted.

While disputes between Washington and Pyongyang over compliance
may continue to occur, they should become less severe at this
stage, once both sides have given up their mutual "hostile
policies" and built more confidence measures. China, Russia and the
IAEA may also assist in resolving disputes should they continue to
occur. Moreover, the verification provision itself would play a
role of deterrence.

At this stage, it is assumed Pyongyang would have achieved what
it wants most: security guarantees and the full normalisation of
relations with the US. Since by this stage it will already have
dismantled its larger plutonium programme, Pyongyang would have no
rationale to undertake the high risk of trying to maintain its HEU
ambiguity. If Pyongyang took such a risk and was detected, it would
lose all vestige of understanding from other countries, and would
also probably lose any chance of regime survival.

To completely root out the source of the nuclear problems on the
Korean peninsula and maintain lasting peace and stability in the
region, the six parties, as agreed in the Joint Statement, would
"explore ways and means for promoting security cooperation in
northeast Asia" In addition to denuclearising, North Korea would
also need to accede to and implement the Chemical Weapons
Convention (CWC) and Biological and Toxin Weapons Convention (BWC).
Pyongyang should also be encouraged to cut its conventional forces
gradually in a way that is qualitatively equivalent to cuts in the
South, particularly the reductions in US forces. This would reduce
significantly North Korea's economic burden and facilitate its
economic reform progress. Such a cut for Pyongyang would be
especially facilitated if US troops were removed from the South. It
is to be hoped that the other parties and states in the region
would help both Koreas to pursue a gradual integration toward
reunification.

At this third stage, other countries would continue to aid North
Korea's economic reform, help Pyongyang improve its human rights,
and provide funds and technologies for modernisation of the
economic infrastructure. For example, South Korea could speed up
its economic cooperation with North Korea, including initiatives
such as the Kaesong industrial park and the reconnection of the
inter-Korean railway. China, based on its reform experience over
the last two decades, could help North Korea switch to a market
economy without losing political stability in the process. As it
did for South Korea, Japan would be expected to provide up to $10
billion as a form of compensation for its colonisation of Korea in
the first half of the 20th century. Russia could also help to
modernise North Korea's railroads and link them up with Russia's
Trans-Siberian railroads en rout to European markets.

Pyongyang would put its nuclear power system under IAEA
safeguards and accept the Additional Protocol. North Korea would
also observe and implement the 1992 joint declaration of the
Denuclearization of the Korean Peninsula, which requires "no
enrichment and reprocessing" on the peninsula.

This process would be greatly facilitated if a group of
supportive countries were to establish a multilateral cooperative
threat reduction (CTR) programme for funding North Korean
denuclearisation, including dismantling nuclear facilities,
shipping fissile materials or remaining spent fuels out of North
Korea, and environmental cleanup activities such as dealing with
nuclear waste. The CTR programme could also help redirect the
"nuclear resource" to civilian purposes.

It is estimated that such a programme to achieve North Korean
denuclearisation could stretch out five years or longer and cost
anywhere from 200-500 million dollars.[15] This could be paid as compensation for North
Korean plutonium "buyoff".

The timing of the LWR is crucial. While the other parties
expressed in the Joint Statement their respect for North Korea
regaining its sovereign right to acquire LWR technology, the
subject of the LWR provision will be discussed "at an appropriate
time" - which is subject to different interpretations. Just after
the Joint Statement was issued, Pyongyang declared that the LWR
should be undertaken before any disarmament. But Washington said it
would "discuss" the LWR subject only after Pyongyang disarms, which
could mean never reaching a provision on the LWR. This LWR issue
would continue to be a big obstacle in the following Six Party
Talks.

What motivates Pyongyang to demand a LWR provision? One major
reason is Pyongyang wants to use the LWR as a tangible measure to
build mutual trust with Washington. Pyongyang hopes to have a
special interaction with Washington during its disarmament
procedure through a linkage between the LWR provision and nuclear
dismantlement. As it tried to do under the 1994 Agreed Framework,
it will seek to use the LWR to schedule the timing of several other
matters including IAEA inspection at suspect waste sites, the
removal of spent fuels and the dismantlement of nuclear
facilities.

Given Pyongyang's concerns, it is not irrational for it to place
so much emphasis on the LWR provision. Pyongyang is concerned about
its energy security and does not want its economy depending on
electricity from the South. Its fuel resource, as in the South, is
very limited: no oil, no gas, and very limited coal. What North
Korea has plenty of is natural uranium, which could supply nuclear
power for hundreds of years. While the South could supply 2 GWe of
electricity, the North does not want this offer to replace the LWR
project, which would be on North Korean soil and is viewed as more
important.

Pyongyang also has political imperatives. It wants to use the
LWR provision to force the US to show its serious commitment to
recognising North Korea's sovereignty. Consequently, it is
suggested here that after North Korea dismantles verifiably its
plutonium programme at Stage Two, the US and others should start
construction of the LWR, and help to meet North Korea's long-term
energy demand with oil and gas. Other countries could also be
invited to help build several gas-fired power stations for North
Korea, with a generation capacity of 2 GWe linked to the Russian
pipeline.[16] A denial of the LWR
provision would make North Korean denuclearisation too
difficult.

On the other side, the North Korean "LWR provision first"
proposal is not feasible. Construction time is around several
years, and as shown in the KEDO LWR programme, is often delayed.
The other countries cannot wait for another ten years. Moreover,
the urgent need for Pyongyang is to rehabilitate its current power
stations and T&D systems as suggested above. Once North Korea
gets what it wants most - normalisation and a reduction of its
major security concerns - it would be expected that as trust begins
to be built, both sides will have fewer problems over the LWR
issue. Consequently, Pyongyang needs also to reconsider the timing
of the LWR provision and show more flexibility.

A Discussion of the Cost of the Roadmap

The total cost to "buy off" a nuclear North Korea and its
missile threat, according to this proposed three-stage roadmap, is
estimated at between $25-50 billion stretched out over ten years.
South Korea would be expected to pay one third of the cost, and
Japan would be expected to provide $10 billion as compensation for
its occupation of North Korea. It has been reported the South Korea
would be willing to pay as much as $15 billion in order to buy off
the North Korean nuclear threat.

The estimate given here is comparable to that of some officials
in Washington. For example, Curt Weldon (Republican, Pennsylvania),
vice chair of the House Armed Services Committee, visited North
Korea in 2003 with a bipartisan delegation of six members of the
House of Representatives. On that occasion, he proposed that the
six parties "shall negotiate and ratify a Korean Economic
Development and Security Initiative to promote investment, economic
growth, trade and humanitarian aid in North Korea. These nations,
with the participation of European partners, commit a total of $3
billion to $5 billion per year for the next 10 years, most of the
funds coming from South Korea and Japan."[17]

Is the cost of several tens of billions of dollars too much? In
comparison, the current war in Iraq costs the US about $4.5 billion
a month, not including the cost of replacement weapons and
equipment. Taking into account the long-term costs of healthcare
for wounded soldiers, a recent study, by Columbia University
economist Joseph E. Stiglitz, who won the Nobel Prize in economics
in 2001, and Harvard lecturer Linda Bilmes, concludes that the
total cost of the Iraq war could reach $1-2 trillion.[18] A full-scale Korean war would likely cost
more than this, given the fact that Seoul would be destroyed by the
North's sustained artillery and that its nuclear missiles could
target some of Japan's cities.

Buying off a nuclear North Korea

The cost of the aid suggested in the roadmap would come to
somewhere between $25-50 billion, based on the following
assumptions:

i) The rehabilitation of its power stations and T&D system
within three to five years costs about $6 billion;

ii) The cost for the HFO delivery for three years could be about
$300 million, assuming that South Korea will then begin supplying
its 2 GWe electricity;

iii) If the South supplies its 2 GWe electricity for seven
years, such a cost could be $7 billon. Here it is assumed that the
South would end its electricity supply when the LWRs begin
operation, and that LWR construction starts within about three
years, with a construction timeline of seven years.

iv) The cost for building gas-fired power stations (with a total
installation capacity of 2 GWe) linked to the Russian gas pipeline
and associated local grids would be about $1.3 billion if
operations started within five years. Also it is assumed North
Korea would get free gas supply for these gas-fired power stations
for five years - at a cost of about $5 billion. Thus, the total
cost of this 'gas' aid is about $6.3 billion.

The total cost of buying off North Korea could also include
additional money funds for CTR, CWC & BWC implementation and
the retraining and re-employment of nuclear scientists, as well as
more aid for its agriculture and economic development, and so on.
With all elements taken into account, a conservative estimate of
the total cost would be somewhere between $25 and $50 billion. As
noted above, this is still far less than the US spends on the war
in Iraq in a year.

Conclusion

Beijing should already have delivered Pyongyang the clear
message that nuclear weapons will not serve North Korea's primary
national interests in the long term. A nuclear North Korea will
incur much more international pressure, including international
economic sanctions; this will worsen or break its already poor
economy, or even provoke a military confrontation with the US,
risking regime collapse as well as war. Moreover, North Korea's
leadership has realised that economic reform is necessary for
economic development. Given that it has very limited resources to
reform its economy, Pyongyang needs to open its door to the
international community, especially its neighbours South Korea and
Japan, for foreign investment, trade and aid.

If, on the other hand, Pyongyang tries to maintain its nuclear
programme, its economy cannot be sustained. Since all its
neighbours have made clear that they cannot tolerate a nuclear
North Korea there will be no lasting cooperation or aid if the
nuclear programme goes forward.

At the same time, the US needs to take a more realistic and
effective way of peacefully solving the nuclear issue on the
peninsula through peaceful diplomacy. Once Pyongyang receives what
it wants most from the US - no "hostile policy," no "regime
change," and "normalisation", as well as other economic benefits,
North Korea is very likely to abandon its nuclear weapon-related
programmes. Such a denuclearisation would be achieved verifiably
through the three stages proposed here, in accordance to the
"reciprocal action" principle.

The cost for such a roadmap is economically affordable. However,
North Korean denuclearisation is dependent on whether Washington,
which has the power to grant or deny what Pyongyang most wants, has
the political will to move forward constructively.

The last several years have shown that the Bush administration's
hard line policy generally backfires. It is time for Washington
itself to take real actions to negotiate a way out of the nuclear
crisis. As the world's dominant power, the US needs to demonstrate
more strategic flexibility, and show leadership to help implement a
feasible roadmap to accomplish North Korea's denuclearisation in a
step-by-step manner.

Dr. Hui Zhang is a research associate in the Project
on Managing the Atom at Harvard Universitys John F. Kennedy School of
Government, specialising in issues related to nuclear arms control and
China's nuclear policy. The views expressed here are the authors alone.

Notes

[1] The parties to
the Six Party Talks are China, DPRK, South Korea, United States,
Russia and Japan.

[7] Wang Yi,
former vice foreign minister and the head of the Chinese delegation
to the first three rounds of the six-party talks, speech given at a
press conference on the first round of six-party talks in Beijing,
August.29, 2003.

[8] Li, Speech at
the Opening Ceremony of the Fourth Round of Six-Party Talks, op.
cit.

[9] Some other
experts also suggest a "plutonium first" approach. See, e.g. Selig
Harrison, et al., Ending the North Korean Nuclear Crisis: A
Proposal by the Task Force on U.S. Korea Policy, 2004.
Available at : http://ciponline.org/asia/Web%20Report.pdf.

[11] It should be
noted that, although this stage focuses on freezing the plutonium
programme, all parties should understand that any freeze should
also cover the HEU programme.

[12] The US spent
$405,106,000 from 1995 through 2003 for HFO supply in return for a
freeze under the 1994 Agreed Framework. A half million ton of HFO
costs about $100 million. See details in Peter Hates, et al.,
'South Korea's Power Play at the Six-Party Talks', East Asia
Science and Security Collaborative Special Report, July 21,
2005.

[13] Such
rehabilitation, from current 2-3 GWe to 8-10 GWe in 1990 is
estimated to cost roughly $5.5 - 7.5 billion. See Hates, et al.,
'South Korea's Power Play at the Six-Party Talks', op. cit.. If the
South Korean supply of 2 GWe electricity would begin within three
years after implementing the denuclearisation agreement (say 2009)
and the KEDO's LWR had been finished in 2003 as expected by 1994
Agreed Framework, then the delay of the supply of 2Gwe electricity
would be about six years. The cost of 2 GWe electricity as South
Korean estimated is around 1 billion US dollars per year. Thus a
loss of a six-year delay of the supply of 2 GWe electricity is
around $6 billion, which is comparable to a rehabilitation cost of
North Korean power stations and T&D system.

[15] See, e.g.
Joel Wit, Jon Wolfsthal, and Choong-suk Oh, The Six Party Talks
and Beyond: Cooperative Threat Reduction and North Korea, A
Report of the CSIS International Security Program, December
2005.

[16] One projected
pipeline of special interest is the Sakhalin I pipeline, which
would cross directly from Russia through North Korea en route to
South Korea. It is expected such a pipeline would be built within
three to four years and cost around $3-3.5 billion. It is estimated
that building eight 250MWe gas-fired power stations (i.e. total 2
GWe generation capacity) combined with the small local grids would
cost about$ 1.2-1.36 billion. See details in Selig Harrison, 'Gas
Pipelines and the North Korean Nuclear Crisis', Foreign Service
Journal, December 2003.

[18] Linda Bilmes
and Joseph E. Stiglitz, The Economic Costs of the Iraq War: An
Appraisal Three Years after the Beginning of the Conflict,
Harvard KSG Faculty Research Working Paper Series RWP06-002,
January 2006.